PCB orders state companies to standardize overtime pay, link it to 48-hour work week

State-owned enterprises (SOEs) and their subsidiaries must change how they pay overtime, according to a circular issued by the Privatization and Corporatization Board (PCB) on July 21, 2026.

The circular instructs all government-owned companies to pay overtime only for work done beyond 48 hours a week. Companies must finalize the changes to their overtime policies by July 30. The new rules take effect on August 1.

According to the circular, the goal is to bring all SOEs under one uniform standard for managing overtime work. The PCB said the move aims to strengthen the governance and financial systems of state companies and align policies across the sector.

Some companies currently apply a fixed cap on overtime payments instead of a 48-hour threshold. The PCB has directed these companies to compare their existing policy with the new 48-hour rule and adopt whichever option is more cost-effective for the company.

The PCB said the changes are expected to help companies plan staff schedules more efficiently, distribute workloads more evenly among employees, and reduce unnecessary reliance on overtime. It added that better control over overtime spending would free up resources for core operations and service improvements.

Part of a wider SOE reform push

The overtime directive follows an earlier PCB order requiring state companies to cut their workforces by 33 percent as part of a broader effort to make SOEs profitable and improve their governance. The PCB had given SOEs three months to meet that staffing target, under a circular first issued in April. Compliance with PCB directives is required under the law governing corporatization of state enterprises.